Secret to Enduring Stagflation Sends Traders to Emerging Markets (Bloomberg)

In general, nations offering some kind of relative insulation from the Western economies are likely to attract investment interest. This could take the form of lower vulnerability to imported inflation, less need for foreign capital or monetary-policy divergence. Sue Trinh, the head of macro strategy for Asia at Manulife Investment Management, identifies Indonesia, Malaysia and Vietnam as examples. Investors have already begun favoring the dollar bonds of these nations, sending their sovereign-risk premiums to the lowest in seven, nine and two months, respectively.
Brazil is an oasis in Latin America, a continent where the overall mood is one of gloom over persistent inflation and growth constriction brought on by policy tightening.
Given that stagflation could leave most countries with anemic real rates, Brazil’s yield is a potential lure for carry traders. China and Vietnam may also find their positive returns giving them an edge.